1. Bad debt deductionsrelated entitiesdebt vs. equityproof. Tax Court determined that allegedly worthless advances to/between real estate developer's related entities weren't bona fide debt, and as such didn't qualify for bad debt deduction. Key factors included that although there were promissory notes with fixed maturity date, repayment was dependent on business success/successful lot sales. It was also telling that purported repayment right was never exercised; and fact that there were no interest payments and only inconsistent principal payments indicated there was no real expectation of repayment, and that advances instead were intended as equity. Reference(s): 1665.132(40) Code Sec. 166 2. Accuracy-related substantial understatement penaltiesburden of proof and productionwritten approval of assessmentreasonable cause; good faith. Accuracy-related substantial understatement penalties were upheld against real estate developer/business owner-operator for years for which he claimed carryback of bad debt deduction for related entity advances that were shown to not be bona fide debt: IRS met its burden of production on penalties' applicability with proof that IRS complied with Code Sec. 6751(b)'s written supervisory approval requirement and that understatement was substantial under Code Sec. 6662(d). And taxpayer had no reasonable cause for his position. Notably, there was no evidence he took any steps to